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LAST WEEK'S STANDOFF at Bethlehem's Church of the Nativity and the suicide bombing at Rishon le Zion's Sheffield Pool Hall both made for gripping television. But neither will change the dynamic of the Israeli-Palestinian conflict the way the week's most significant development did.

The week's biggest Middle East story happened not in the region but in Washington. For the first time since the start of the now dead Oslo peace process in 1993, talk of Palestinian regime-change--a subject previously deemed unmentionable by the American and Israeli foreign policy establishments--emerged in the form of open discussion of the need for sweeping reforms of the Palestinian Authority.

The prelude to this turn of events occurred on May 3, when Israeli deputy prime minister Natan Sharansky--long the only voice to demand that Israel and the West insist upon Palestinian democratization--called for the end of the current Palestinian dictatorship in an op-ed in the Jerusalem Post. Under the multi-point plan Sharansky outlined, Israel, the United States, and moderate Arab states would replace the Arafat regime with a new Palestinian Administrative Authority responsible for ruling the territories currently controlled by the Palestinians. Outside funding for this PAA would be contingent upon the dismantling of terrorist organizations, the "privatization" of the now state-controlled Palestinian media, a crackdown on incitement to terror, and most important, a timetable for free and fair elections. Israel's only power over the new PAA would be its right to "veto" candidates openly endorsing violence against Israelis or directly linked to terrorist organizations or past terrorist actions.

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At first, the "Sharansky Plan" generated about as much internal Israeli debate as all his previous calls for Palestinian reform--that is, none. En route to Washington, however, Sharon called Sharansky to say he was pushing to incorporate parts of the plan into the government's proposal to be presented to President Bush. Still, not a single reform-oriented element of the Sharansky Plan made it into any official Israeli document.

Nevertheless, the Sharansky Plan made the rounds in Washington. Two days after its publication in the Jerusalem Post, National Security Adviser Condoleezza Rice made headlines when she announced her support for "serious" Palestinian administrative reform.

Arriving in Washington the same day, neither Prime Minister Sharon nor his delegation saw the Rice statement as the dramatic positive development that it was. But this time, Israeli tone-deafness may not matter. What does matter is that what Sharon came to talk about and what Rice claimed to want were two sides of a coin: Both grasped the need to move beyond Arafat. For the first time since Oslo, it is legitimate for a senior member of the United States government to talk about changing the Palestinian regime.

Those unfamiliar with Israel's reliance on dumb luck to bail it out of jam after jam might be excused for thinking this a beautifully coordinated masterstroke. Israel's prime minister arrives in Washington carrying a bulky "briefing book" of more than 100 pages of original documents seized from Arafat's offices in Ramallah, to display "the smoking gun": irrefutable evidence that Arafat was intimately involved in dozens of specific terrorist attacks. At precisely that moment, the president's national security adviser embraces reform.

Sharon arrives to land the knockout blow, while Rice starts creating a positive vision of what should come next. The stage seems set for finally tackling the single greatest impediment to progress in the Israeli-Palestinian conflict, Yasser Arafat's regime, and replacing it with a government more tolerant and free. Now, if only more Israelis would join Sharansky in believing that decent government for and by the Palestinians could be achieved.